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When we purchase our first property, we have to make difficult decisions. With this, it is important that we make the right decision because it can be the difference between saving thousands of dollars every year and losing more.

If we really want to save thousands of dollars, we have to know the difference between fixed and floating rates when it comes to refinancing or home loan. Here’s the difference:

Fixed rate: In fixed-rate home loans, we have the same or permanent interest rate and mortgage repayments over a set period of time. This also means that we are locked in a particular bank that finances our loans.

Floating rate: In floating-rate home loans, we can never be sure of the repayment because it is based on the fluctuation of the market. The rate will depend on the movement of Singapore Interbank Offered Rate and most of the time, it is within a three-month period. This means that our mortgage repayments change every one to three months.

Knowing this, how do we choose between the rates? Here in Singapore, floating rates are 1% lower than fixed rates and that means we can save a considerable amount of money. However, there are risks involved when we consider floating rate. Floating rates are vulnerable to market conditions.

If we consider fixed interest rates, we will be assured that regardless of the market conditions, our repayment and interest rate will remain the same. In fixed interest rate, we will be able to plan our budget without thinking of the rising repayments monthly. If we are working under a limited budget, fixed rates are better for us.

If your New Year’s resolution involves saving more money, you have to be serious about it. Saving money is challenging especially if you are the type that purchases anything you want or see in the market. You are always reminded to save money so when the time comes, you will not struggle. When you save money, you have to be firm about it.

Not all people are saving money. Saving money will be to your advantage. Think of it as your emergency fund. The first thing that you need to do is create a budget or chart. Ideally, other people say that you should commit about 20% of your income to savings. To give you more ideas about saving money, you can consider the following things:

Certificate of Deposit

A good way to start saving is through Certificates of Deposit or CDs. The good thing about CD is that you define the terms. You will define when it will mature and when it will go away. Do not worry because when it returns, it will bring more. You have the choice to reinvest your money, change the terms or just get the cash. Remember that longer terms mean higher interest rate.

Stick to your budget

It is important that you stick to your budget. When you appropriate a part of your income to savings, you should do your best to stick to it regardless of the things going on. Saving should be practiced and observed all throughout your life. Saving is not short-term. When you think of saving, you have to be realistic and do not set your goals too high because there are things that you need to consider like utilities, bills, mortgage, education and groceries.

Think of the reason

You are saving money in case something unfortunate happens. You are not saving to move around or purchase something that you want. You have to think of your reason so it will be clear to you. Saving does not mean building your wealth. Saving money means spending less than what you are making.

Do not be distracted

When you are serious about saving money, you should not let other things distract you from your goals. If you are easily tempted with online purchase, you should avoid it so you will not be distracted. They say that prevention is better than cure. If you do not need a thing, avoid it and do not be distracted.

Evaluating personal expenses

Paying for your personal or basic needs is crucial but if you are paying for other things that are not important, it is a waste of money. For example, you deserve watching movies but if it is available online, you do not need to pay the cinema house or cable just to see it. You have to evaluate your personal expenses first and see where you can improve.

These are just ideas to help you save money for the upcoming years.

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